That's the highest level since January, when 636,000 housing starts were reported. Economists had expected an annual rate 570,000 units, according to consensus estimates from Briefing.com.

The report also said there were 624,000 building permits issued in June, 2.5% above the revised May rate of 609,000. Building permits were forecast to have remained steady at an annual rate of 609,000 units.

While construction has shown some resilience recently, the market for new homes has been stifled by a glut of foreclosed properties.

In addition, the overall housing market has been hindered by high levels of unemployment, despite a modest pick up in hiring this year. Homebuilders have also had trouble financing projects, as credit remains tight.